Correlation Between HP and MERCK
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By analyzing existing cross correlation between HP Inc and MERCK INC, you can compare the effects of market volatilities on HP and MERCK and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HP with a short position of MERCK. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and MERCK.
Diversification Opportunities for HP and MERCK
Very good diversification
The 3 months correlation between HP and MERCK is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and MERCK INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK INC and HP is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HP Inc are associated (or correlated) with MERCK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK INC has no effect on the direction of HP i.e., HP and MERCK go up and down completely randomly.
Pair Corralation between HP and MERCK
Considering the 90-day investment horizon HP Inc is expected to generate 1.89 times more return on investment than MERCK. However, HP is 1.89 times more volatile than MERCK INC. It trades about 0.02 of its potential returns per unit of risk. MERCK INC is currently generating about 0.02 per unit of risk. If you would invest 3,476 in HP Inc on August 31, 2024 and sell it today you would earn a total of 67.00 from holding HP Inc or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.31% |
| Values | Daily Returns |
HP Inc vs. MERCK INC
Performance |
| Timeline |
| HP Inc |
| MERCK INC |
HP and MERCK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and MERCK
The main advantage of trading using opposite HP and MERCK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, MERCK can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MERCK will offset losses from the drop in MERCK's long position.| HP vs. RLJ Lodging Trust | HP vs. Aquagold International | HP vs. Stepstone Group | HP vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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